Coinbase Custody added Telegram’s GRM to its services recently. Regardless, the US Securities and Exchange Commission (SEC) has disputed the token’s legal status calling it a security.
The SEC has already stopped Telegram’s token sale. The token sale raised over one and a half billion dollars ($1.7B) for the Gram token (GRM). The company had sold nearly three million GRM Tokens for its TON blockchain. The SEC has now taken issue with the offering stating that the ICO violates the Securities Act of 1933. If Telegram fails to deliver the tokens by the end of October, it will be forced to forfeit the money it raised.
Are Coinbase Custody and Crypto Rating Council unreliable?
Coinbase had recently accepted the token by listing its support on Coinbase Custody. The tokens fulfilled the exchange’s criteria for being a token and not a security. However, the SEC has now questioned this characterization. This will raise questions about Coinbase’s ability to judge the assets it supports on its platform
This has also caused an effect on the Crypto Rating Council that is led by Coinbase itself. The group was created to act as an authority that would judge whether an asset is a security or not. The SEC has demonstrated that the Council is not doing its job reliably.
Twitter users were quick to take notice of the matter and have tweeted regarding the subject. These include user Larry Cermak that asked, “How could the Crypto Rating Council not prevent this?”
The council’s creation was made public on September 30 as a joint project between various crypto exchanges such as Kraken, Bittrex, and Coinbase. The council rates assets by giving them a rating from one-to-five with five being “definitely security.”
Whether the council reconsiders its criteria of judgment remains unknown. Regardless, as of yet, Coinbase is still supporting the GRM token on its Coinbase Custody.